Real Estate Investing – Property Financing Loans vs Government Grants

Many people are interested to invest in small businesses and real estate properties. However, gathering enough resources to finance this venture is not easy. Despite the dire need for funding, investors should be careful in assessing deals for real estate investment loans. Also, they should be reminded that the government gives grants annually to help qualified individuals pull through this endeavor. Further explanation about these things is provided below.

Several investment property financing options are open to investors. These include getting investment property mortgages or home equity loans, borrowing money from friends and family, using credit cards, spending retirement accounts and applying for government grants.

Investment property mortgages and bank loans may be very enticing for their low interest rates and long payment terms. However, many capitalists find it difficult to meet their strict requirements. Some would even go as far as saying that it is almost impossible to obtain them. Also, some bank loans may take personal assets and other properties as collateral.

Home equity loans are also appealing because of the fast and easy way to have them approved. However, many homeowners have already been in trouble because of them. If the investment gets out of hand, things can go from trouble to disaster for their houses are also at stake in this financing scheme.

Borrowing money from friends and family may also be a good idea. Most of the time, they loan money with reasonable interest rates, sometimes even none, and a flexible payment plan. To make matters organized, a contract should still be drawn or a promissory note should be made. However, this will put the relationship at risk of potential conflicts by muddling business with personal relationships.

Funding needs can easily be solved by using credit cards. However, investors who opt to use this method should bear in mind their sky-high interest rates. It is not suitable for long-term utilization. Caution should always be practiced in using credit cards.

There is also the choice for investors to spend their retirement accounts. The money is originally saved for the future. And, although real estate investments might be good for the future, this is also a risky move. It often leaves ambitious capitalists with nothing to spend as they near their golden years. Many financial planners would say that this should be used as a last resort.

Government Grants For Small Businesses

Now, having government grants for real estate investing or small businesses may be the answer to these financing dilemmas. They have many key benefits. One of them is their low cost. Since a great amount of money is allotted for funding these grants, there is a good chance that applicants need not spend anything. In some instances, people approved for government house funding are allowed to have it without paying until they refinance or sell it. Often times, first-time buyers are the preferred recipients of these grants.

These assistance programs may have different and flexible definitions of who is considered a “first-time buyer”, allowing more applicants to be qualified for grants. Also, grants offer terms and conditions which are favorable to fit applicants. Government grants for real estate investing usually comprise of exceptionally low interest rates and extended payment terms. These are all adjusted to make it more convenient for the people who are vying to get them.

NOTE: As opposed to loans, government grants do not have to be paid back. It takes an effort to apply for a grant, but beyond that, it is essentially free money!

Some investors may think that the requirements to get a government grant are too difficult to meet. They get quite intimidated about this procedure sometimes. To enlighten them about this process, suggested steps are listed below.

Research – Look for grants that are appropriate for the kind of investment you are planning. Carefully study the details of each grant. They have various terms and conditions. Find the most suitable one for your situation.

Applications – You should make sure that the information you have declared in the application is accurate. This is crucial for the chance of grant approval and any inaccuracies could endanger the whole application process. Go over it and check for inconsistencies and mistakes. Also, applicants might want to seek the help of family members or friends to edit and proofread the form.

Proposal – Depending on the type of assistance program, other grants may require a specific format. Usually, though, this is an essay justifying the investors’ need for the financial aid. Particularly for real estate investments, the people who will evaluate the proposal will likely favor individuals whose actions will benefit the community. Take this into account when writing your proposal.

Submission – Ensure the requirements set by the government have been met and all requirements are submitted before the deadline. Aim to submit everything at least one week before the actual deadline. This will prevent late arrival of the proposal. Once more, check that these documents are complete before sealing them in an envelope and mailing them or submitting them electronically. Be sure to request confirmation of receipt if possible so you will know they have received all necessary documents and you have done everything within your power.

Once again, applying for a government grant for a small business or real estate investing venture may seem like a tedious process, but it is absolutely well worth the effort. Since we’re talking about large sums of money that the grantee will never have to pay back, the government will only reward those who show dedication and ambition but in a well-organized format that indicates a clear benefit to the community and/or economy. There is such a large amount of unclaimed government money available for entrepreneurs as very few apply for these grants. This means that the odds are in your favor.

Disclosure: The opinions expressed by SACDC are strictly our own. We are an independently owned organization. Any other organizations we refer may compensate us for referring customers to their website or phone number. We only recommend the most trusted companies with the best reputation and quality in the industry.